Health Tech Investment Act
- Bill Number
- S. 1399
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Health
- Status
- Introduced
- Latest Action
- 2025-04-09: Read twice and referred to the Committee on Finance.
- Last Updated
- 2025-12-05T22:56:26Z
AI-Generated Summary
Purpose
The Health Tech Investment Act (S. 1399) aims to update Medicare payment rules to better support innovative algorithm-based healthcare services, such as those using artificial intelligence (AI) or machine learning. It ensures these services receive fair reimbursement under the Medicare program's hospital outpatient prospective payment system (OPPS), which sets standardized payments for outpatient hospital services, to encourage adoption of new health technologies.
Key Provisions
- Special Payment Rules for Algorithm-Based Services: Starting January 1, 2026, Medicare must assign certain algorithm-based healthcare services to a "new technology ambulatory payment classification" (NTAP C). This is a temporary payment category for emerging technologies that haven't yet built up enough usage data for standard pricing. Assignment is based on costs submitted by the service's manufacturer, including invoice prices, subscription fees (like software-as-a-service models), staff time, overhead, and other expenses.
- Duration and Stability of Payment Category: These services cannot be removed from the NTAP C for at least 5 years or until Medicare has enough real-world claims data to shift them to a standard payment category. Medicare must periodically adjust the payment if needed.
- Expanded Eligibility Criteria: Medicare must tweak its NTAP C application process to include AI-based services that:
- Are new and distinct procedures (with a clear start, process, and end).
- May be used alongside or as add-ons to other services but still require extra resources.
- Definition of Algorithm-Based Healthcare Service: This refers to FDA-approved or cleared devices/software using AI, machine learning, or similar tech to provide clinical insights (e.g., for screening, diagnosing, or treating diseases) that doctors use in patient care. Medicare can expand this definition with input from relevant groups.
- Codification of Software-as-a-Service Payments: Effective retroactively from January 1, 2023, Medicare must follow an existing policy treating subscription-based software (like cloud-based health tools) as payable under OPPS, locking in this approach without needing annual rule changes.
Significant Changes to Existing Law
- Amends Section 1833(t) of the Social Security Act, which governs OPPS payments, by adding a new subparagraph (H) for AI-based services and referencing NTAP C in payment calculations.
- Broadens NTAP C eligibility beyond standalone procedures to include adjunctive or concurrent services, which previously might not qualify if bundled with others.
- Mandates cost-based pricing from manufacturers rather than relying solely on historical claims data, addressing the challenge that new AI tech often lacks initial usage volume.
- Permanently codifies a 2022 OPPS rule on software-as-a-service payments, making it statutory law instead of regulatory policy that could change.
Potential Impacts
- On Government Agencies: The Department of Health and Human Services (HHS) and its Centers for Medicare & Medicaid Services (CMS) will need to update application processes, review manufacturer cost submissions, and monitor data for reassignments, potentially increasing administrative workload but streamlining payments for innovative tech.
- On Citizens (Medicare Beneficiaries): Could improve access to cutting-edge AI tools for diagnosis and treatment in outpatient settings, potentially leading to better health outcomes without coverage gaps due to payment uncertainties.
- On Providers and International Relations: Hospitals may see more predictable reimbursements, encouraging investment in AI tech. No direct international impacts, but it could boost U.S. competitiveness in global health tech markets by supporting domestic innovation.
Main Stakeholders Affected
- Health Tech Manufacturers: Benefit from guaranteed payment pathways and cost recovery for AI/software products.
- Hospitals and Outpatient Providers: Gain stable Medicare reimbursements for using these services, reducing financial risks.
- Physicians and Practitioners: Easier integration of AI tools into care, improving efficiency in screening, diagnosis, and treatment.
- Medicare Beneficiaries: Primarily older adults or disabled individuals relying on Medicare for outpatient care.
- HHS/CMS: Responsible for implementation, cost adjustments, and consultations.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens Medicare's framework for emerging technologies by embedding AI-specific rules into statute, reducing reliance on changeable regulations and potentially limiting future legal challenges over payment denials. Requires FDA clearance as a baseline, aligning with existing device approval laws.
- Constitutional: No apparent issues; it operates within Congress's spending power under the Commerce Clause for federal health programs.
- Political: Promotes bipartisan support for health innovation (introduced by senators from both parties), signaling a push to modernize Medicare amid growing AI adoption in healthcare. Could influence future tech policy by setting precedents for reimbursing digital health tools, but may face debate over costs to the Medicare trust fund.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (4)
Sen. Heinrich, Martin [D-NM], Sen. Blackburn, Marsha [R-TN], Sen. Coons, Christopher A. [D-DE], Sen. Banks, Jim [R-IN]
Recent Actions
- 2025-04-09: Read twice and referred to the Committee on Finance.
- 2025-04-09: Introduced in Senate
Bill Versions
- Health Tech Investment Act — issued 2025-04-09 — PDF (6 pages)